WTO failure portends limits to 'open' trade

SEATTLE
— When nations start horse-trading over trade, they have to be willing to make sacrifices: Industries may face new competition, unions may see their ranks fall, farmers may have to move off their land.

What became clear last week was that few nations are willing to take the political heat that often comes with such losses. Indeed, the collapse of the protest-marred trade talks is raising a fundamental question about the future: Will 135 nations ever be able to agree on ways to further liberalize trade?

As one trade minister put it afterward: "More nations were trying to take items off the table than put them on the table."

At the least, the failure to launch a new round of global trade negotiations means there will be long delays in resolving nettlesome issues such as ending export subsidies on farm products, keeping e-commerce free of tariffs, and eliminating nontariff restrictions on goods and services.

Immediately after the collapse of the World Trade Organization talks, US trade representative Charlene Barshefsky questioned whether the current system could even be made to work.

"In my judgment, it would be best to take the time out and find a creative means to make the WTO work," she said. The organization's director general, Mike Moore, was told to go back to Geneva to figure out what the WTO should do next.

"What happened in Seattle is an indication of how hard it is to do these things," says former US trade representative Clayton Yeutter, who negotiated the launch of the last round of trade talks in 1986.

One reason it was hard to get things done in Seattle was the disruption in the streets. Thousands of protesters kept delegates from starting the talks on time, and it was difficult to shuttle between hotels, where many of the discussions are normally held. On some nights, the press corps sat entranced in front of television sets showing Seattle police firing canisters of tear gas at activists.

Street celebrations

After the talks failed, college-age demonstrators danced in glee. Groups such as Ralph Nader's Public Citizen, which organized peaceful protests, took credit for the collapse. Developing countries claimed the result showed they could no longer be taken for granted. But in the end, the trade talks fell apart because the key players - the United States, Europe, and Japan - refused to budge from their positions.

"I just don't think there was the political will to get a deal done," says Robert Wright, deputy trade minister for Canada.

Some observers here say the US came into the talks without much flexibility. For example, Japan was pressing the US to agree to negotiate on antidumping statutes, and the Europeans wanted to discuss antitrust laws. The US refused.

At the same time, the Europeans and Japanese were not budging much on export subsidies for agriculture. The positions were so set that much of the Japanese delegation left Seattle on Friday afternoon - hours before the talks officially were "frozen" by Ms. Barshefsky.

Developing nations, which stood to gain from many elements of the liberalization, became a force in the talks as they bogged down. A delegate from Zimbabwe, Yash Tandon, stood on a chair outside the press room after the talks collapsed. He said he was pleased the talks had failed.

The chief negotiator for the European Union, Pascal Lamy, acknowledged that the developing nations had become "a new complexity that we couldn't deal with."

When Barshefsky discerned that the talks were stalled, she called a meeting of the major developed countries. But when the developing nations found out they had been left out of the meeting, they became incensed. "They will never treat us again like that," vowed Mr. Tandon.

Disbelief

Trade ministers of many developing nations expressed shock when President Clinton arrived and proposed that the WTO take up the issue of labor standards. Until then, the US position had been that core labor standards would not be part of the WTO's agenda. "The developing countries had deep suspicions the US was not here to do a deal, but had its own political agenda," says Marino Marich, a trade expert at the National Association of Manufacturers.

Barshefsky says one of the future issues the WTO will have to deal with is "transparency," opening trade talks to the public. "This will help perceptions," she says.

Doreen Brown of Consumers for World Trade favors opening the Geneva-based organization to scrutiny. But she says it's doubtful advocacy groups will get much out of the meetings. "If they attend one or two of those meetings, they will get awfully bored and never go back again."

US business groups were stunned when the talks collapsed, having been told in briefings that progress was being made. Even so, the WTO will begin limited negotiations on liberalizing trade in agriculture and services, under the mandate of the last round. "We wanted to keep the ball rolling on trade liberalization," says Mr. Marich.

Next year, the trade group may still reconvene in Geneva, where the atmosphere might be more conducive to negotiation. "It might have been better off to meet in Geneva in the first place," says Mr. Yeutter. "You don't have to have these things in a particular place."